Sincerely Finance & Investment Pvt Ltd, New Delhi V. ITO WARD- 23(4), New Delhi

ITA 8728/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4097 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2016-2017
• Appeal Filed On: 07-11-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHIVANI SINGH
• Keywords: Unexplained cash credit
• Section: 68; 133(6)

Judgement Text

I.T.A. No. 8728/Del/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH “G” : DELHI ] BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER A N D SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER आ.अ.सं./I.T.A No. 8728/Del/2019 िनधाᭅरणवषᭅ/ Assessment Year: 2016-17 M/s. Sincerely Finance and Investment Pvt. Ltd., 9–H, 9 th Floor, 15-Hansalaya Building, Barakhamba Road, New Delhi – 110 001. बनाम Vs. Income Tax Officer, Ward : 23 (4) New Delhi. PAN No. AAACS4871L अपीलाथᱮ / Appellant ᮧ᭜यथᱮ / Respondent िनधाᭅᳯरतीकᳱओरसे /Assessee by : N o n e; राज᭭वकᳱओरसे / Department by : Ms. Shivani Singh, [CIT] – D. R.; सुनवाईकᳱतारीख/ Date of hearing : 20/06/2022 उ᳃ोषणाकᳱतारीख/Pronouncement on : 23/08/2022 आदेश / O R D E R PER C. N. PRASAD, J. M. : 1. This appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-8, New Delhi [hereinafter referred to CIT (Appeals)] dated 26.09.2019 for assessment year 2016-17, in sustaining the addition made under I.T.A. No. 8728/Del/2019 2 Section 68 of the Income Tax Act, 1961 (the Act) by the Assessing Officer. 2. In spite of issue of notice none appeared on behalf of the assessee nor any adjournment was moved. We also notice that even before the ld. CIT (Aappeals) in spite of issue of several notices by the ld. CIT (Appeals) none attended for hearing. Therefore, we proceed to dispose of the appeal on hearing the ld. DR. 3. The ld. DR submits that the Assessing Officer made addition under Section 68 of the Act in respect of share application money/un-secured loans received by the assessee from various entities observing that the assessee did not prove identity, creditworthiness and genuineness of the loan creditors and identity and source of share application money was not established. The ld. DR submits that the assessee failed to prove the identity of the share-holders’ source of money which was recorded as share application was also not proved and in respect of un-secured loans the assessee could not prove the identity, creditworthiness and genuineness of the transactions and, therefore, rightly treated the said amounts as unexplained by the Assessing Officer. 4. Heard the ld. DR perused the orders of the authorities below. The Assessing Officer treated Rs.79,92,160/- being share application money as unexplained cash credit under Section 68 of the Act, observing as under:- “4.6.4 The assessee company is private limited company. In the case of such companies there is dose and proximate relationship between the promoters/directors and the shareholders. The closely-held companies are permitted to accept the subscriptions of share capital or deposits only from the friends or relatives of the promoters/directors and such I.T.A. No. 8728/Del/2019 3 companies are not allowed to accept subscriptions or deposits from the general public. As such, there should have been no difficulty on the part of the assessee to produce somebody from the said entity, had the whole apparatus not been merely a conduit to plough :ack the unaccounted money of the assessee- company in the garb of share application money. The assessee-company's contention that they don’t know why the directors of the investors companies not came and reason for their not appearance may be explained by themself (extracted from statement of the director of the assessee company) 4.6.5 In the circumstances of the case, the following facts which speaks for themselves and are vital: i) The assessee has received huge amount of fund from outside parties. ii) Such persons giving credit did not receive any dividend or interest of whatsoever nature from the assessee while the money remained at the later’s disposal. iii) Despite repeated opportunities, the persons could not be produced by the assessee who cannot be presumed to have no information and knowledge regarding the whereabouts of the investing persons. Moreover as per assessee the two of the investor companies have same building address, in which the address of assesee company. iv) The information received u/s 133(6) from 3 ompanies cannot be relied upon as the nature of transactions shows that they cannot be said to be represent any actual business transactions. Moreover the quantum of income ear red by the companies as well as their own capital are also not proportionate. 4.6.6 Applying the tests laid down in various judicial decisions and having regard to the above facts/ discussion, the identity of the investor much less their creditworthiness and genuineness of the transactions cannot be said to be established. 4.6.7 Now discussion is made on the stands of the judicial authorities on this issue. The Hon'ble Delhi High Court in the case of M/s Nova Promoters, it has been held that burden to prove the identity, genuineness of the transaction 2 and creditworthiness of share applicant lies on the assessee. Moreover in the recent decisions in the case of CIT Vs. N.R. Portfolio, in ITA No. 1018/2011 & 1019/2011 and also in he case of CIT Vs. N Tarika I.T.A. No. 8728/Del/2019 4 Properties Investment Pvt. Ltd. in ITA No. 2080/2010, the lon'ble High Court of Delhi has strongly endorsed the view of the High Court in the case of M/s. Nova Promoters. 4.6.8 Thus, keeping in view the totality of the facts, above discussion the amount of Rs. 79,92,160/- is added to the income of the assessee company u/s 68 of the I. T. Act, 1961.” 4. In respect of un-secured loans the Assessing Officer held that assessee has not proved identity, creditworthiness and genuineness of the loan creditors observing as under:- “5.2 Since these confirmations were not sufficient the A.R. of the assessee vide note sheet entry dated 19.12.2018 was asked to file confirmation along with bank account statement, ITR and audit report including all annexure. AR of the assessee vide submission dated 26.12.2018 filed the confirmed copy in respect of M/s Propitious Infrastructure Pvt. Ltd. and M/s Sampark Associates Pvt. Ltd. As discussed in Para 5.1 above. Here it is also to be noted that Signature of Mr. Gopal (Authorised Signatory) in 2 confirmations, one submitted on 19.12.2018 and another on 26.12.2018 (copy scanned above) appears to have been signed by two different persons which further substantiate -he case of the revenue. This is to mislead the department. 5.3 In view of the above discussion, identity, credit- worthiness and genuineness of the loan creditors remains unverified. Moreover, in each case, the returned income varies from Rs.2,08,870/-, Rs.1,41,140/- and loss of Rs.3,32,850/- in the case of Pooran Trading Pvt. Ltd., Propitious Infrastructure Pvt. Ltd. & Sampark Associates Pvt. Ltd. respectively. These facts are crucial to determine the credit worthiness of the ton creditors. These are the party who have outstanding opening balance also and as confirmed by the director of the assessee company, no return/interest was given to the loan creditors. Accordingly, genuineness of the transaction is not established. As discussed in details, the case of persons applying from share capital/share premium here also all the three limbs of section 68 remains unproved. Accordingly, provisions of I.T.A. No. 8728/Del/2019 5 section 68 are dearly attracted in the case of loan creditors also. 5.4 Thus, keeping in view the totality of the facts, above ti scussion the amount of Rs. 33,80,65,397/- being short term borrowings received during the year are adder to the income of the assessee company u/s 68 of the I.T. Act, 1961.” 5. Before the ld. CIT (Appeals) the assessee could not establish the genuineness of the share application money and the un-secured loans by filing the necessary evidences and the ld. CIT (Appeals) sustained additions observing as under:- “5. On merits, it is seen from the order of the AO that there the AO had made additions on account of share application money u/s 68 of the Act and short term borrowings/unsecured loans u/s 68 of the Act. As per the detailed discussions made by the AO in his order at para 4 and 5, the appellant failed to establish the genuineness of loan creditors remains unverified therefore, the AO made the addition of Rs.34,60,60,557/-. Before me also, during appellate proceedings, neither any authorized person has attended nor any further details have been filed by appellant company, despite allowing opportunity of being heard in that regard, so as to justify its claim that no additions needed to be made in appellant's present case. Therefore, considering the facts and circumstances of the case, I have no reason to interfere with the findings of the AO and provide any further relief to appellant in respect of disallowance made by AO. Accordingly, assessed income of Rs.34,66,78,120/- made by Assessing Officer, is hereby upheld. Grounds of appeal taken by appellant are dismissed.” 6. The notice issued by the Registry fixing the date of hearing 20.06.2022 returned un-served with the endorsement “Left without address”. The assessee even before us could not produce any evidence to substantiate its claim. None of the averments made in the assessment order were rebutted with evidences before us. In the circumstances, we uphold the order of the Assessing Officer as I.T.A. No. 8728/Del/2019 6 well as the ld. CIT (Appeals) and reject the grounds raised by the assessee. 7. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on : 23/08/2022. Sd/- Sd/- (PRADIP KUMAR KEDIA) ( C. N. PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 23/08/2022. *MEHTA* Copy forwarded to 1. Appellant; 2. Respondent; 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, New Delhi. Date of dictation 04.08.2022 Date on which the typed draft is placed before the dictating member 10.08.2022 Date on which the typed draft is placed before the other member 23.08.2022 Date on which the approved draft comes to the Sr. PS/ PS 23.08.2022 Date on which the fair order is placed before the dictating member for pronouncement 23.08.2022 Date on which the fair order comes back to the Sr. PS/ PS 23.08.2022 Date on which the final order is uploaded on the website of ITAT 23.08.2022 Date on which the file goes to the Bench Clerk 23.08.2022 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the order